“On October 16, 2012, A123 Systems, Inc. announced that it has entered into an asset purchase agreement with Johnson Controls, Inc., which plans to acquire A123’s automotive business assets, including all of its automotive technology, products and customer contracts, its facilities in Livonia and Romulus, Mich., its cathode powder manufacturing facilities in China, and A123′s equity interest in Shanghai Advanced Traction Battery Systems Co., Alpha’s joint venture with Shanghai Automotive. The asset purchase agreement also includes provisions through which Johnson Controls intends to license back to A123 certain technology for its grid, commercial and government businesses. A123 also continues to engage in active discussions regarding strategic alternatives for its grid, commercial, government and other operations, and has received several indications of interest for these businesses.

To facilitate the transaction process, A123 and all of its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. A123’s non-U.S. subsidiaries were not included in the filing. This action is expected to allow A123 to provide for an orderly sale of its automotive business assets and all other assets and business units under Section 363 of the Bankruptcy Code and help maximize the value of its assets for its stakeholders.

In conjuction with the proposed asset purchase agreement, A123 has received a commitment from Johnson Controls for $72.5 million in debtor in possession financing to support A123’s continued operations during the pendency of the sale process…”

Hoping to kick-start an electric-vehicle battery industry, the U.S. provided $1.26 billion since 2009 to battery makers including Johnson Controls Inc, JCI +0.33%LG Chem Ltd. 051910.SE +0.80%, and Dow Koka DOW +1.45%m, a joint venture of Dow Chemical Co. and South Korea’s Kokam Co., to set up nine factories in four U.S. states. Most are producing far fewer batteries than originally expected. Ener1 Inc., another government-grant recipient, sought Chapter 11 bankruptcy restructuring and has since emerged.

A123 was awarded $249 million in Department of Energy grants and has used about half so far to pay for some of the costs of building a factory in Livonia, Mich. It was among the earliest entrants in the field, opening its Michigan battery plant in 2010, and outlining plans for a second U.S. facility.

The news of A123′s troubles come in a bad week for the companies that have benefited from the government push to support so-called “green jobs” in the US, particularly in the solar energy and electric vehicle industry.